Risk-Based Pricing Notice: Why You Got One and What It Lets You Do

Published by the Modern Lending Solutions editorial team. Last reviewed: October 30, 2026.

Short answer: a risk-based pricing notice tells you that a lender used your credit report to give you credit on terms that are worse than the best terms it gives to a substantial share of its customers. It names the credit reporting company that supplied the report, and it gives you the right to a free copy of that report if you ask within 60 days of getting the notice. Check the report for errors before you accept the terms. This is general information, not legal or financial advice.

When a lender must send one

The Fair Credit Reporting Act says that if a person uses a consumer report in connection with credit “on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that person, based in whole or in part on a consumer report”, it must give you an oral, written or electronic notice (15 U.S.C. 1681m(h)(1), official U.S. Code text, read October 30, 2026). Regulation V applies this to credit “primarily for personal, family, or household purposes” (12 CFR 1022.72(a), eCFR, text up to date as of October 28, 2026, read October 30, 2026).

“Material terms” means the APR, with separate rules for credit cards and for credit that has no APR (12 CFR 1022.71(n), eCFR). A lender may decide who gets a notice by comparing the terms each customer gets, or by a credit score cutoff: under the credit score proxy method, it sets the cutoff where about 40 percent of the customers it lends to have higher scores and about 60 percent have lower scores, and sends a notice to each customer below it (1022.72(b)(1)). A notice is also required when a lender reviews an account you already have and raises the APR based on your credit report (1022.72(d)).

What the notice must say

The notice must include, among other things (12 CFR 1022.73(a)(1), eCFR):

“A statement that the terms offered, such as the annual percentage rate, have been set based on information from a consumer report”.
That the terms “may be less favorable than the terms offered to consumers with better credit histories”.
That you are encouraged to check the report and have the right to dispute anything inaccurate.
The name of each credit reporting company whose report was used, and how to contact it.
That federal law gives you the right to a free copy of the report from that company “for 60 days after receipt of the notice”.
If a credit score was used to set the terms: the score, the range of possible scores, up to four key factors that hurt it (five if one is the number of inquiries), the date it was created and who provided it.

The notice must be clear and conspicuous (1022.73(b)). For a loan, it comes before you sign, but not before the lender tells you it will give you the credit; for a credit card or other open-end account, it comes before your first transaction (1022.73(c)(1)). You are entitled to one notice per extension of credit (12 CFR 1022.75(a), eCFR).

When no notice is required

Regulation V lists exceptions (12 CFR 1022.74, eCFR):

You applied for specific terms, such as one set APR, and got them, unless the lender set those terms after you applied and after it pulled your report (1022.74(a)).
The lender sends you an adverse action notice instead (1022.74(b)).
The offer was a prescreened firm offer of credit (1022.74(c)).
Credit score disclosure: the lender gives every applicant a notice with their credit score, the range, how their score compares with other consumers and other required statements. There is one version for loans secured by one to four units of residential real property and one for other credit (1022.74(d) and (e)).
No credit score was available from the company the lender uses, and the lender sends a notice saying so instead (1022.74(f)).

So if you got a credit score disclosure instead of a risk-based pricing notice, that can be how the lender meets the rule.

How it differs from an adverse action notice

A risk-based pricing notice means you were offered credit, on terms based on your credit report. An adverse action notice is for a denial or other adverse action, and the law says a lender that must send an adverse action notice cannot meet that duty by sending a risk-based pricing notice (1681m(h)(4)). For what an adverse action notice must say, see loan application denied: the adverse action notice.

What to do when you get one

Note the date you got the notice; the free report right runs for 60 days after you receive it.
Request the report from the company named in the notice, using the contact details it gives.
Check the report and dispute anything that is wrong. See dispute a loan reporting error.
If a score was shown, read the key factors listed; they show what pulled the score down.
Compare the APR and total cost with other offers before you sign.

What worse terms can cost, only for the math

This example is only for the math. The $5,000.00 loan is an example figure. The first rate is the Federal Reserve’s August 2026 average of 11.90% APR for 24-month personal loans (G.19); the second adds 5 points only to show the effect of a higher rate.

Option	Monthly payment	Interest	Total paid
24 months at 11.90%	$235.13	$643.12	$5,643.12
24 months at 16.90% (example only)	$246.97	$927.28	$5,927.28

$235.13 x 24 = $5,643.12, and $246.97 x 24 = $5,927.28. On these assumptions the higher rate costs $284.16 more. For how APR differs from the interest rate, see APR vs interest rate and what is a good APR for a personal loan. To check your reports before you apply, see check your credit report before a loan.

Questions to ask the lender

Which credit report and which credit score did you use to set my rate?
What would my APR be if an error on my report is fixed?
Is the rate offered the rate I applied for, or was it set after you pulled my report?
How long is this offer open while I check my report?

Checklist

Read the notice and write down the date you got it.
Get your free report within 60 days.
Dispute any errors.
Compare the total cost with other offers.
If you were denied instead, read the adverse action notice.

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Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.

What Is a Risk-Based Pricing Notice?